The previously discussed emerging payment systems rely upon, and
may be integrated with, underlying network communication
technologies and protocols. If not properly implemented, new
and emerging network communication technologies may expose the
payment device or system to additional vulnerabilities. This
is particularly true with any network that relies upon broadcast
technology to send and receive information. Even close
proximity wireless devices, such as RFID, have been found to be
vulnerable to eavesdropping at distances greater than they were
designed for. Care should be taken to ensure that the
underlying network communication technology has security
appropriate to the information being transmitted. Currently,
there are four types of short-range wireless connectivity
technologies that can be used to connect payment devices to POS
devices. These include: Infrared, RFID, NFC, and
Bluetooth.

Infrared

Infrared communication technology works similarly to a
television remote control as information is sent from a device to a
payment terminal via a frequency that is invisible to the naked
eye. These devices can have signals that are stronger than
other contactless technologies and can work from several yards
away. Security concerns arise regarding the ability to
compromise a transmission because of the strength of the
signal. This concern is somewhat mitigated because there must
be a direct line of sight for the transmission to work. The
Infrared Financial Messaging Group (IrFM) is a consortium of
technology and financial companies (including Visa) that work
together to promote uniform and interoperable standards See
http://irda.affiniscape.com/associations/2494/files/Publications/FM_Exec_Summary.pdf
for infrared devices. These standards include encrypted
channels.

Radio Frequency Identification

RFID is a method of remotely storing and accessing data on
devices called RFID tags/transponders. An RFID tag can be
incorporated into a plastic card (as with contactless cards), a
fob, or other device. RFID tags also can be embedded into any
product to track inventory. RFID tags contain antennas that
enable them to communicate via radio frequency with an RFID
transceiver. The technology protocol most widely used for
RFID is the ISO 14443 standard. This standard is very general
and can be used for multiple types of media and a broad range of
hardware.

Near Field Communication

NFC is another short-range communication technology similar to
RFID, but based on the ISO 18092 standard. NFC chips can be
embedded in a mobile device such as a telephone to enable it to act
as a contactless payment card. NFC has additional
functionality such as the ability to act as a reader of other NFC
devices, thus enabling two consumer devices to share data or
transact payments with each other. NFC chips can also be
integrated with other applications within the mobile device to
permit transactions from multiple accounts.

RFID and NFC have become very flexible solutions for alternative
payments. Financial institutions are adding RFID tags to
credit and debit cards to speed transactions. In some parts
of the world, consumers can link their credit or debit accounts to
cell phones enabled with RFID or NFC technology to make purchases
at retail sites equipped with payment readers.

Bluetooth

Bluetooth is a close-range wireless radio frequency
communication protocol that has been implemented in a wide range of
technologies. Bluetooth uses a stronger signal than RFID or
NFC and is detectable at greater distances. There has been
limited adoption of this protocol.